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Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince
Edition 8ISBN: 978-1259129858Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince
Edition 8ISBN: 978-1259129858 Exercise 2
A firm produces output according to a production function Q = F ( K,L ) = min {4 K ,8 L }.
a. How much output is produced when K = 2 and L = 3 ?
b. If the wage rate is $60 per hour and the rental rate on capital is $20 per hour, what is the cost-minimizing input mix for producing 8 units of output?
c. How does your answer to part b change if the wage rate decreases to $20 per hour but the rental rate on capital remains at $20 per hour?
a. How much output is produced when K = 2 and L = 3 ?
b. If the wage rate is $60 per hour and the rental rate on capital is $20 per hour, what is the cost-minimizing input mix for producing 8 units of output?
c. How does your answer to part b change if the wage rate decreases to $20 per hour but the rental rate on capital remains at $20 per hour?
Explanation
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The given Leontief production function t...
Managerial Economics & Business Strategy 8th Edition by Michael Baye,Jeff Prince
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